eTrade 2011 Annual Report Download - page 41
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Operating Expense
The components of operating expense and the resulting variances are as follows (dollars in millions):
Year Ended Variance
December 31, 2011 vs. 2010
2011 2010 Amount %
Compensation and benefits $ 333.6 $ 325.0 $ 8.6 3%
Clearing and servicing 147.1 147.5 (0.4) (0)%
Advertising and market development 145.2 132.2 13.0 10%
FDIC insurance premiums 105.4 77.7 27.7 36%
Professional services 89.7 81.2 8.5 10%
Occupancy and equipment 68.8 70.9 (2.1) (3)%
Communications 67.3 73.3 (6.0) (8)%
Depreciation and amortization 89.6 87.9 1.7 2%
Amortization of other intangibles 26.2 28.5 (2.3) (8)%
Facility restructuring and other exit activities 7.7 14.4 (6.7) *
Other operating expenses 154.3 104.0 50.3 48%
Total operating expense $1,234.9 $1,142.6 $92.3 8%
* Percentage not meaningful.
Compensation and Benefits
Compensation and benefits increased 3% to $333.6 million for the year ended December 31, 2011 compared
to 2010. The increase resulted primarily from higher compensation expense as a result of increasing our financial
consultants by 42%, partially offset by a decrease in incentive compensation.
Advertising and Market Development
Advertising and market development expense increased 10% to $145.2 million for the year ended
December 31, 2011 compared to 2010. This fluctuation was due largely to the planned increase in advertising
expenditures in our continuing effort to attract new accounts and customer assets during the year ended
December 31, 2011.
FDIC Insurance Premiums
FDIC insurance premiums increased 36% to $105.4 million for the year ended December 31, 2011
compared to 2010. The increase was due primarily to an industry wide change in the FDIC insurance premium
assessment calculation, effective in the second quarter of 2011.
Professional Services
Professional services increased 10% to $89.7 million for the year ended December 31, 2011 compared to
2010. The increase was due primarily to a $6.0 million credit in connection with a legal settlement in the third
quarter of 2010, which decreased professional services for the year ended December 31, 2010. There were no
similar settlements made during the year ended December 31, 2011.
Communications
Communications expense decreased 8% to $67.3 million for the year ended December 31, 2011 compared
to 2010. The decrease was driven primarily by a decline in vendor services fees compared to 2010.
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